According to the theory of purchasing power parity, in the long run
A) the nominal exchange rate should equal the domestic inflation rate.
B) the domestic inflation rate should equal the foreign inflation rate.
C) the real exchange rate should equal 1.
D) the real exchange rate should equal the domestic inflation rate divided by the foreign inflation rate.
C
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The exchange rate is the
a. total yearly amount of money changed from one country's currency to another country's currency b. total monetary value of exports minus imports c. amount of a country's currency that can be exchanged for one ounce of gold d. sum of net unilateral transfers e. price of one country's currency in terms of another country's currency
Theoretically, the net balance of payments is
A. A country's capital inflow minus its capital outflow. B. Exports minus imports. C. Foreign demand for a country's currency minus foreign supply. D. The current account plus the capital account.
You observe that at your current production of lunch boxes, the average total cost of producing lunch boxes is $5 and the marginal cost of producing lunch boxes is $2. What should always happen if you increase lunch box production?
A. Marginal cost will rise. B. Marginal cost will fall. C. Average total cost will rise. D. Average total cost will fall.
Refer to the diagrams. Diagram (A) represents:
A. equilibrium price and quantity in a purely competitive industry.
B. the pure monopoly model.
C. an industry in which there is productive efficiency but not allocative efficiency.
D. a single firm operating in a purely competitive industry.